On 4 May 2017, important changes to the implementation norms of the Romanian Tax Code entered into force. The changes were implemented as a result of Government Decision no. 284/2017, which was published in the Official Gazette on 4 May. The most notable changes include:  1. General provisions 

  • Introduction of application rules on the VAT deduction of acquisitions of goods and services by a taxable person when his VAT registration number was cancelled; and
  • Clarification and examples on how invoices for the supply of goods and services to taxable persons, who have their VAT registration number suspended, should be issued after their VAT registrations are reactivated.

2. Corporate income tax 

  • Exception of costs related to software’s rights acquired and used after 1 January 2017 from corporate income tax in accordance with the reinvested profit incentive;
  • Introduction of an example of the proper computation of non-deductible expenses related to non-taxable income;
  • Exclusion of loans from banks, financial institutions and similar organisations, detailed in the implementation norms, from the computation of the debt/equity ratio; and
  • Explicit mention that non-deductible interest expenses and net foreign exchange losses can be carried forward indefinitely until full deductibility is attained.

3. Micro-enterprise tax regime 

  • Clarification of the taxation regime applicable to micro-enterprises and the exit rules for certain situations based on turnover below EUR 500,000, share capital value, number of employees, etc.

4. Personal income tax 

  • Introduction of detailed rules on the personal income tax exemption for individuals performing seasonal activities; and
  • Introduction of detailed rules for the transfer/sale of real-estate property, including clarifications on the methodology used for the tax computation.

5. Social contributions 

  • Alignment of the implementation norms with the amendments to the Tax Code on the removal of the maximum thresholds for social security and individual health fund contributions based on salary income;
  • Inclusion of distributed dividends, even if not paid in the year of distribution, in the monthly calculation of the health fund contribution; and
  • Clarification of the computation of the maximum threshold for the social health fund contribution owed by individuals on income from investments and other sources of incomes.

6. VAT 

  • Clarification on the adjustment of the taxable base for VAT where the contract is cancelled or a court ruling confirms a reorganisation plan;
  • Definition of immovable goods, needed to align Romanian law with EU law;
  • Clarification that the taxable base for imported goods does not include the work and valuation services related to tangible goods, regardless of whether the services were rendered within the EU. This clarification is necessary to avoid double taxation;
  • Clarification of the proper method for adjusting deductible VAT for capital goods, as aligned with the current provisions of the Tax Code; and
  • Introduction of rules for the special flat rate scheme for farmers.